Market report: Rockhopper jumps on news from Falklands

Rockhopper shares hit an all-time high after the explorer said it
expected its oil discovery off the Falkland Islands to make money.

Rockhopper shares hit an all-time high after the explorer said it expected its oil discovery off the Falkland Islands to make money.Photo: Eddie Mulholland

By Sean Farrell

10:37PM BST 17 Sep 2010

The company said a test at its Sea Lion 1 well had produced consistent rates of more than 2,000 barrels of oil a day, as it had hoped.

"Rockhopper is the first company to successfully flow oil to surface in Falkland Islands waters," Pierre Jungels, executive chairman, said. "We believe that Sea Lion is the largest fan sandstone body in the North Falkland Basin and, given this successful flow test, that the Sea Lion discovery will be commercially viable."

Rockhopper shares jumped 87 to 420p, valuing the company at £809m.

Desire Petroleum, which also has prospects in the Falklands, surged 34¼ to 153½p.

The news from the South Atlantic bucked the gloom in the wider market as the blue-chip index gave up early gains to fall for the third straight day.

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The FTSE 100 fell 31.69 to 5508.45, just scraping a 0.1pc increase for the week – its fourth week of gains. The FTSE 250 lost 1.14 points to close at 10440.98.

Financials and energy stocks dragged leading shares lower on weak consumer confidence figures from the US and jitters over possible defaults on sovereign debt.

Consumer sentiment in the world's biggest economy fell to its weakest in more than a year as worries over jobs and growth intensified. The cost of insuring Irish sovereign debt against default hit a record high on concerns it was close to calling in the International Monetary Fund and the European Union for support.

Man Group, the hedge fund business, was the biggest faller as investors pared holdings in riskier assets, dropping 10.4 to 225.20p. RAB Capital, Man's sector peer, fell ½ to 12½p following a profit warning after the market closed on Thursday.

Barclays dropped 10.1 to 304.65p. The bank's fall in the general gloom was compounded by UBS analysts cutting their earnings estimates.

The analysts said Barclays was more exposed to the volatile business of investment banking than its peers and that activity in that area was likely to reduce.

Barclays' retail and commercial bank is also facing headwinds as Bob Diamond prepares to take over as chief executive, the analysts said, as they slashed their forecasts for earnings by 8pc for this year, 13pc for next year and 20pc thereafter.

Old Mutual, the insurance group, was also caught in the financials sell-off, shedding 2.8 to 134.80p.

Meanwhile, defensive stocks were not exempt from the market's malaise. Shire, the drugmaker, fell 45p to £14.68 and utility Scottish & Southern Energy lost 24p to close at £11.28.

Energy stocks fell on concerns about weaker growth as crude oil fell more than 1.5pc to under $74 a barrel.

BP fell 5.4 to 403.05p, despite news that the oil giant's relief well had finally intersected the Gulf of Mexico well.

Aggreko was the top blue-chip riser, up 63p to £16.13 as Credit Suisse put the temporary power supplier in the spotlight by starting coverage, albeit with a "neutral" rating.

Invensys, the engineering group, was the next strongest gainer, jumping 8.9 to 258.80p after announcing its rail unit had signed a deal with Chinese manufacturer CSR – a first foray into business in the Asian giant.

Evolution Securities said it expected more such deals and that the announcement underlined the "pivotal role" Invensys was carving out for itself.

J Sainsbury, the supermarket chain, was boosted by a broker upgrade from UBS to "buy" from "neutral". The shares closed up 6.6 at 358.40p. Burberry, the luxury clothes retailer, also rose, gaining 19½ to 929½p.